We went on a couple of reconnaissance missions on Healthcare recently, both from a top-down and a bottom-up perspective. Our objective was to estimate a reasonable, believable revenue growth rate for the Healthcare sector, specifically for Healthcare Technology companies. Our top-down and bottom-up view gave us a range of 5-8% revenue CAGR. We’re inclined to bet on 8 rather than 5.
This range is a good marker for us. We compared it to our estimates of market-implied revenue growth for our list of Healthcare Tech companies. This is straight out of our Expectations Investing playbook – “what do we need to believe to buy this story and its stock?” In the Healthcare space, we will rely on this type of reverse-engineering far more than usual.
In the last Worldview piece on Healthcare Tech, we zoomed into 2 potential investments. In this piece, we’ll make a decision.